What are Credit Bureaus and Inquiries?
Updated September 2026
Credit building can feel overwhelming. A lot of that comes down to confusing financial terms. Credit bureaus and inquiries are two of the first things you'll run into on your credit-building journey, so they're worth understanding early.
What Are Credit Bureaus?
Credit bureaus are companies that collect data about your credit history. When you apply for a credit card or loan, lenders pull this data from a credit bureau to help make their decision. The 3 major credit bureaus are:
Experian
Equifax
TransUnion
Each bureau uses its own scoring model, but they all weigh similar factors like your payment history, credit limits, and how long you’ve had credit.
What Are Credit Inquiries?
When you apply for a product like a credit card or mortgage, the lender usually reviews your credit report from a bureau. That report helps them decide whether to approve your application. There are 2 types of credit inquiries:
Soft Inquiry: This type doesn’t show up on your credit report. It happens when you check your own credit, when a lender pre-approves you for an offer, or when an employer runs a background check. Some landlords use a soft inquiry for rental applications too, though this varies by landlord.
Hard Inquiry: This type shows up on your credit report and can affect your score. It happens when you actually apply for something, like a credit card, auto loan, mortgage, or personal loan. A hard inquiry can stay on your report for up to 2 years, though it typically only affects your score for about 12 months, and the impact usually fades within a few months.
Applying for several types of credit in a short period can have a bigger impact on your score than a single application, since it can look like a sign of financial risk to lenders. However, if you’re rate shopping for the same type of loan, like a mortgage or auto loan, multiple hard inquiries within a short window (usually 14 to 45 days) are often counted as just one inquiry.
Can I Get Approved to Build Credit Without a Hard Inquiry?
You can apply to build credit with Perpay, and there’s no hard credit check with the major credit bureaus. Perpay reports your spending limit to the three major credit bureaus for just $5/month.*
*The credit score (VantageScore 4.0) increase of 30+ Points is based on the average of approximately 50,000 Perpay+ customers with a baseline credit score of 550 or below during the first year of reporting. The same group observed an average credit score increase of 55 points over a two-year period if they maintained on time payments both on and off Perpay’s platform. Credit score improvement is not guaranteed, and individual results may vary based on a number of factors. Perpay will report your transactions to Experian®, Equifax®, and TransUnion®. On-time payment history can have a positive impact on your credit score. Late payments may result in payment reporting to credit bureaus that may negatively impact your credit score. This product will not remove negative credit history from your credit report. Perpay+ is only available to eligible Marketplace account holders. Fees apply. See the Perpay Terms and Conditions for more details.
Perpay does not provide financial, legal, or regulatory advice. The content is for general informational purposes only. Any views expressed are those of Perpay, not its partner institutions. We do not endorse or guarantee the accuracy of any linked third-party information. Links to Perpay products are advertisements. All external brand names belong to their respective owners.